Tesco – Do they enjoy an Information Technology (IT) - generated competitive advantage? Where does it come from?

Tesco has definitely used IT to gain competitive advantage over its competitors as shown from the following strategies.
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Strategy #1: Improving Business Process

Through the implementation of RFID and its own partial ERP system based on the technologies of Oracle, Tesco was able to differentiate itself from its competitors while improving its supply chain process.

Role of IT: Enhance Efficiency

This improved the efficiency in placing, retrieving and monitoring inventories in its warehouses which saved time and storage space.

Outcome: To reduce the cost of doing business

The enhanced efficiency directly translate to cost savings for Tesco and also increased customer satisfaction through products availability.
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Strategy #2: Build a Strategic IT Platform

In 1996, Tesco brought its retail shopping online through the launch of Tesco Direct Service. Additionally, Tesco introduced other online services that allowed its consumers to compare products prices with its competitors, trade shares, interact with other consumers, with an aim to provide a positive and personalized online shopping experience. Furthermore, we see Tesco acquiring 35% stake in Groceryworks.com so as to venture in the US e-grocery market.

Role of IT: New Business Opportunities

Tesco was able to leverage on the online platform as a means to tap into new business opportunities not only in UK, but globally.

Outcome: Create To create new avenue of sales

Tesco Direct Service captured more than 50% of the UK e-grocery market and by 2001, it was the number one e-grocer in UK. Its online platforms thus created new avenue of sales for Tesco.
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Strategy #3: Build a Strategic Customer Information Data Base

Through the use of NCR Teradata warehouse, Tesco was able build a data base through the information collected via the Clubcard and to provide a 360 view of its customers.

Role of IT: To provide quality and value to customers

Essentially, the Teradata warehouse allowed Tesco to understand its customers shopping habits and needs, and to subsequently provide what the customers truly n need and value.

Outcome: Maintain Valuable Customer Relationships

By targeting customers’ genuine needs and wants, Tesco was able to increase sales as well as established customers’ satisfaction, which was one of the most important factors in every business.
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In conclusion, it is through providing innovative IT services, differentiating itself, that create a competitive advantage for Tesco - the largest retailer in UK, and third in the world.

"At Tesco, technology is right at the heart of our business - helping to improve the shopping experiences for all our customers." - From Tesco.com